SDI Corporate Blog

Sustainable Results


Leave a comment

Baseball and Procurement: More in Common Than You Think

“Tis the season.  Post-season play continues for Major League (MLB) baseball as the final two teams have advanced and begun play in the World Series, the annual championship round of games endearingly referred to as the Fall Classic.

While MLB doesn’t boast a lengthy history comparable to that of procurement process execution (1869 vs. almost forever) they nonetheless share several essential process components.  Three that readily come to mind are sourcing, data analytics and risk management.   In fact, last year’s MLB Diversity Business Summit – the premier sports employment conference and supplier diversity trade fair- provided a wide range of

procurement ops mlb

procurement opportunities, not including the actual sourcing of their “core” commodity:  the major league players themselves.

Procuring core commodities is critical to any business. High quality baseball players are absolutely essential for competitive advantage, especially during the Fall Classic.

Baseball’s sources of supply

According to a recent piece in The Wall Street Journal, “The overwhelming majority of major-league players come from one of two distinct pipelines. One is in Latin America, where an ingrained baseball culture coupled with rich signing bonuses serve as a magnet. The other is the American travel baseball circuit, in which parents pay thousands of dollars for children—nearly all of them white—to play year-round schedules in pursuit of a scholarship.”

Imagine the number of “procurement scouts”  required to cover two continents.

Once the teams are staffed, with 25 to 40 men on the roster, it is time to play, and perform, well. As in procurement, data analytics enters into play. The greatest example of leveraging data, and addressed in one of our earlier blogs, was outlined in Michael Lewis’s 2003 business best seller, Moneyball: The Art of Winning an Unfair Game. He recounts how the manager of one of baseball’s infamous underdog teams, the Oakland Athletics, leveraged baseball statistics and data to determine player recruitment. By simply shifting reliance from a player’s hitting record to their on-base percentage, the game was transformed forever.

Increasingly, data analytics are crucial to every day play.  According to a July copy of BizTech magazine, “Every major league team has developed an analytics department over the past several years, but some more than others are pushing the envelope in using the technology.

arthurlindbergh-foanalytics-2

The accompanying graphic illustrates the escalating use of analytics in MLB over the last few years…and the premium teams are willing to pay for “statheads.”

Similarly, innovative analysis of sourcing, spending data and supplier info – when collected and analyzed – gives an organization a competitive edge.

 

Yet, risk remains.

There is a fine balance between taking too much or not enough risk. Insufficient willingness to take risk in prospects may leave a team in short supply of future star players.  Conversely, taking excess risk may deliver an inflated team payroll yielding disappointing results.  Data analytics have proven to mitigate this risk.

Likewise, in contractor services procurement. Tracking and measuring a contractor’s performance and skill set, coupled with an executable feedback loop, provides an organization with a decision-making process. Will the tardy contractor be hired for future engagements? Will the error prone fielder be signed to a new contract?

If cutting-edge technology and innovative business processes are not part of your procurement organization SDI can help. SDI is uniquely positioned to bring process improvements that will enable your business to go further than it has gone before.

Advertisements


Leave a comment

Very Real Supply Chain Risk

Harvey, Irma and Maria.  These are seemingly innocent names and quite likely the given name of friends and family of countless people over hundreds of years.

Enter hurricane season 2017 and these appellations take on a new meaning. As the Atlantic hurricane season enters its second half  the effects of the aforementioned storms have generated a stunningly large volume of damage. And the season has two months remaining.  The loss of business and personal property, sizeable economic impact and most significantly, lack of swift recovery efforts are likely immeasurable.

Although the National Oceanic and Atmospheric Administration (NOAA), the United States science-based federal agency, purports that it might be too early to definitely blame gas-house emissions and global warming on the uptick of devastating hurricane activity, they do note that human activities may have already caused changes that are not yet detectable.NOAA additionally indicates increased global warming might cause more intense and destructive potential per storm.

Various supply chain service sectors have been considerably disrupted and, unfortunately, among the most notable are those crucial to recovery efforts such as pharma (drug shortages due to factory destruction in Puerto Rico, for example) and transportation (damage to rail tracks, runways and roads). Yet, human and environmental factors are but two areas influencing efficient supply chain operation.

The optimal preparation to rapidly react to these and countless other unanticipated circumstances is risk mitigation or risk management, with risk defined as the “probability of occurrence x consequences.” The Supply Chain Risk Leadership Council (SCRM), a collaborative council that shares risk best practices, defines supply chain risk management as “the coordination of activities to direct and control an enterprise’s end-to-end supply chain with regard to supply-chain risks.”

Data from previous disasters such as Katrina have contributed to existing supply chain risk mitigation knowledge but there is much more to be learned about the response and recovery efforts from the recent spate of storms.  While the most capable of supply chain professionals have integrated risk management into their process portfolio, global environmental and political risks, in particular, act as clear reminders to strengthen risk management and supply chain disruption strategies.

What are the factors requiring risk mitigation and management

The accompanying graphic from logistics blogger Emilin Jimenez  supply_chain_riskscrisply illustrates the

 

 

numerous factors to be considered when crafting a risk mitigation strategy.

Armed with the right data, information and strategy, supply chain professionals are positioned to execute SC processes with speed, agility and high performance. As United States founding father Ben Franklin stated, “By failing to prepare, you are preparing to fail.”

Our thoughts are with and will continue to remain with those affected by the recent devastating events.


Leave a comment

Is Procurement Child’s Play?

Procurement is hardly child’s play, considering the numerous interconnected tasks required for efficient and effective execution.  Practitioners would enthusiastically argue that the procurement function has matured over the years – from scribbled orders on papyrus to a globally digital operation.  It has gradually morphed into a critical corporate function which profoundly impacts an enterprise’s bottom line.

The accompanying graphic, created by Bill Michels, CEO at Aripart Consulting, was presented during the Horizon 2014 Purchasing Conference. Michels, pointing out the changes over several decades said, “Over time, the procurement function has gone from being transaction-driven through a variety of stages until today, when the real focus of the department is around being driven by the business strategies of the organization.”

procurement evolution

Hardly child’s play.

Yet, wouldn’t it be interesting – and fun – to be able to explain procurement to a child, perhaps even using a universal business model with which they are likely to be familiar. For our purposes, we will parallel several current supply chain methodologies with the age-old street lemonade stand.

Procurement practices such as strategy development, inventory optimization, and demand forecasting are a few choice examples.

Strategy

Fairly simple to describe: a plan of action to achieve one’s goals. A business strategy might differ slightly.  Wikibooks would have you believe a business strategy to be, “formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its long-term objectives.” And profits.

Lemonade Stand Translation: Mom or Dad, please purchase the necessary quantities –at the right price –  of lemons, sugar and cups so that after I pay you back for your financial outlay of materials, I may keep what is left over (profits).

Inventory optimization

Too much inventory leads to lower profits, yet with insufficient inventory customer demands will fall short.  According to Wikipedia, “many organizations that utilized inventory optimization reduced inventory levels by up to 25 percent in one year and enjoyed a discounted cash flow above 50 percent in less than two years.”

Lemonade Stand Translation: Dixie cups (or a reliable –let’s not forget quality– competitor) are a must have to sell lemonade.  Help Mom or Dad understand that unit pricing might be best at buying 100 while understanding that damage may occur with storage.  Sourcing the cups from a discount supermarket rather than the local gourmet shop might enhance the bottom line. Purchasing a small amount of cups, initially, will lead to less waste.  But, good inventory management starts with good …

Demand Forecasting

The term demand forecasting is fairly self-explanatory; what do you predict the estimated sales will be for your product. Most companies use historical data as input for their determination.

Lemonade Stand Translation: What does the weather look like?  If this isn’t the first lemonade stand of our young proprietors they have probably learned that July is hotter than September; a great help in determining when and how many ingredients to purchase.  Of course, allowing sufficient purchasing lead time with mom or dad is necessary to meet the demand of customers.

What about the competition down the street?  Perhaps some benchmarking is on order.  Where did they ever get those cute cups?

The list is endless.

The message here isn’t that Procurement is easy.  It might be easy to explain, but its innate complexities render it an important function of the corporation. And if procurement isn’t your core competency, consider outsourcing it.

We are here to help.


Leave a comment

What a coup!

A procurement coup, that is. A coup, and not of the military sort, “is an instance of successfully achieving something difficult,” according to Oxford Dictionary. Or, according to Merriam-Webster, “a brilliant, sudden, and usually highly successful stroke or act.”

Historically, there are countless coups of note. And arguably, many of the most remarkably valuable of these may be referred to as procurement coups.

The Louisiana Purchase comes to mind.

In 1803, sitting United States president Thomas Jefferson acquired an enormous swath of land, over 800,000 square miles, from the French for a mere $11M dollars.  Initially, Jefferson was opposed to the idea of such an expansive acquisition fearing it was both an unconstitutional maneuver and a potentially unfair expansion of the federal government’s power. Ultimately, Jefferson came around and the resulting land purchase nearly doubled the size of the United States.

The French were not the only ones who sat at the negotiation table with the U.S. Over a half a century after the Louisiana Purchase, in 1867, U.S. Secretary of State William H. Seward signed an agreement with Czarist Russia after the U.S. Senate approved the treaty of purchase. Apparently, the Russians lacked sufficient financial resources to adequately maintain military and civilian presence in such a sprawling region.   Eventually dubbed Seward’s Folly due its cost and the abundance of frozen wilderness to be procured in the $7M deal, it expanded the land holdings by 586,412 square miles which is roughly twice the size of Texas. The eventual discovery of gold, oil and other natural resources provided abundant prosperity for many.

Brilliant procurement purchases are not strictly limited to large land acquisitions. The recent –and rather unexpected- $13 billion purchase of organic food provider, Whole Foods, by giant online retailer, Amazon, not only shocked the global investment community but will redefine the grocery shopping experience. As the New York Times succinctly noted, “this will instantly transform the company that pioneered online shopping into a merchant with physical outposts in hundreds of neighborhoods across the country.”

The above-mentioned procurement examples simply represent a handful of purchasing achievements. The procurement function can be remarkably transformative for any organization… or government. Admirable negotiation skills, strategic direction and sound execution underpin the procurement process.  It is not merely about achieving the lowest price. It includes developing stable partnerships with trusted suppliers, preparing for disruptions through risk mitigation and understanding customer requirements. The effective procurement function provides a gateway to profits.

At SDI, we recognize the value of identifying which business processes are candidates for outsourcing.  And with 25 years of experience delivering procurement solutions for global customers, we are ready to maximize your bottom line results.


Leave a comment

I See You

This phrase may sound dreadfully creepy, depending on the context in which it used. Imagine someone hovering over your shoulder as you diligently work or innocently play on your device of choice. As they linger nearby they are eagerly scribing notes on the content of your text messages, emails written, photos taken and websites visited. None of us would stand for it.

Yet, we do and we know we do. Digitally.

Unless you’re streaming live video of yourself through a webcam or smart video device your physical self remains unseen. Yet, the digital footprint left behind by simply hovering with a mouse or swiping through a touchscreen retains sufficient hidden data to paint a fairly accurate portrait of who you are and what you like.

The accompanying infographic  from the digital literacy library of La Salle Academy in Providence, RI visually illustrates various components that drive the digital footprint.

footprint

Feel like making that footprint accessible to hackers? By not updating security software, using weak passwords, and retaining inadequate privacy settings on websites and apps, users are left vulnerable to unwanted access.

It is no surprise that Facebook, Amazon and other sites mine this data to provide us “branded” individuals with customized marketing campaigns and content. But what about those who’d like to opt out?

Major technology players have taken action to reduce this privacy invasion. Google, who had habitually been scanning users’ emails in an effort to glean information allowing them to cleverly target ad content, has recently announced an end to that practice. However, according to Business Insider “Instead of scanning a user’s e-mail, the ads will now be targeted with other personal information Google already pulls from sources such as search and YouTube.”  Rest assured you will still be the recipient of customized, targeted content.

Firefox, the free and open-source browser developed the non-profit Mozilla Foundation, has a fairly new sibling in town… Firefox focus.  This browser not only blocks ads but also provides tracking protection for Apple and Android devices. Users must keep in mind that Focus is a minimalistic browser that offers limited configuration.  Additionally, it uses Yahoo as its default search engine which might prove unappealing for many users.

Facebook has data privacy issues as well but they have larger issues to contend with, such as fake news, hateful posts and terrorist propaganda. Several weeks ago Elliot Schrage, Vice President for Public Policy and Communications for Facebook posted a series of “hard questions” as a means of opening a dialog on controversial issues, including privacy. Users are welcome to pose additional questions to Facebook at hardquestions@fb.com.

In the meantime, if the technology giants are not meeting your digital privacy needs Stay Safe Online is an organization whose mission is to empower a safer digital world. They offer plenty of tips and resources on how to stay safe online and minimize data intrusions.


Leave a comment

Social Media or Bust

“How do I love thee? Let me count the ways…”  Those immortal words were penned by the renowned Victorian poet, Elizabeth Barrett Browning, in the mid-19th century. Rest assured, love poems will no doubt continue to thrive and be scribed by lovebirds, but perhaps a more telling question for the 21st century business enterprise might be:  On how many social media platforms shall I engage?  Let’s see if I can even count that high!

To be sure, engagement in social media is an undeniably essential 21st century tool to reach, influence and retain customers and business partners. Digital social media is a terrific marketing technique that is less costly than its paper-based analog partner and expands the visibility of the products and services of businesses. Not to mention being a terrific community builder.

Who was the trailblazer for this ubiquitous publicizing tool? It depends on to whom you pose the question. Some might argue it dates back to an early postal system, the advent of the telegraph or even the telephone and radio.  Each of these, according to Small Business Trends, would qualify since each method provides a means of quickly –well, relatively quickly when considering their respective eras- communicating news and information across long distances.

Alternatively, The History Cooperative begins its social networking saga in the 20th century declaring the website SixDegrees.com as the birth of social media.  Six Degrees, now defunct, enabled users to create profiles and friend others users.  Sound familiar?

For the more digitally curious that would like to know who created what when, the accompanying infographic, by Fandom Marketing,  succinctly portrays the major players and the years in which they gained prominence.

rise of social media

But enough history, how about the present?

While I’ve outlined the benefits of developing an appropriate social presence, not maintaining sufficient presence surely smacks of technological illiteracy.  Creating multiple accounts that gather dust due to inactivity sends a message: you are either no longer in business or you haven’t grasped the importance of creating good content regularly.

Judiciously choosing the right platform is where the magic begins. Rather than creating accounts on numerous platforms, choose the 2 or 3 that make sense for your business. For example, the local plumber might choose Facebook as his / her preferred platform.  It is community oriented and networks locally. Conversely, a seller of enterprise software to the Fortune 500 might opt for LinkedIn over Instagram.

If you are looking for further guidance on the platform that best suits your needs, Forbes recently wrote a piece Which Social Media Platforms Are Right For Your Business while Huffington Post offers their own opinion on digital networking here.

If you’re looking for SDI, you can learn more about us on Twitter, LinkedIn and, of course, our blog.


Leave a comment

Data Fixation

What do baseball, Wall Street and supply chains have in common? A fixation with data analysis, to start.

Once upon a time there used to be data… now it’s all about Big Data. Data collection and its high-tech partner, data analytics, is, according to Wikipedia a “process of inspecting, cleansing, transforming, and modeling data with the goal of discovering useful information, suggesting conclusions, and supporting decision-making. Data analysis has multiple facets and approaches, encompassing diverse techniques under a variety of names, in different business, science, and social science domains.” At the end of the day it is the quality of the data that reigns supremely.

Evidently, data analytics is embraced by an incalculable array of practitioners. But let’s get back to baseball first.

Michael Lewis’s 2003 business best seller, Moneyball: The Art of Winning an Unfair Game, persuasively explains how Oakland Athletics General Manager Billy Beane, using judiciously selected and interpreted statistical data, was able to assemble a very formidable baseball team on a budget far less than most other Major League Baseball teams. In the 2011 film version of the book, Moneyball, starring Brad Pitt as the data hero, (spoiler alert) the A’s don’t win the World Series. However the Boston Red Sox triumph a scant 2 seasons later by implementing the same statistical model established by the Athletics.

Additional variations of moneyball are played on Wall Street. Hungry to identify the trending prices of stocks and commodities, companies leverage the attendance at large business conferences and deploy data hunters to search for contacts that may have data valuable for forecasting the stock prices of other companies.

Hedge funds have gotten into the act, too.  According to the Wall Street Journal article, Wall Street’s insatiable lust: Data, data, data, “WorldQuant, a quantitative hedge fund based in Connecticut, has a team that reviews hundreds of data sets a year and works to bring online as many as possible that provide some value. Its staff of scientists and mathematicians then go to work on the data to see if it helps predict revenues at companies or other market phenomena.”

Comparable to the interpreted statistical data used in the baseball scenario, Wall Street relies on correctly interpreted data (quality data) to make decisions on investments and risk management. Incorrect or missing data arose as a key contributor to the mortgage crisis in 2008.

Who is else is using data analytics?  Although, a better question might be, “who isn’t?” The accompanying graphic, from McKinsey Consulting, paints a picture of which industries are engaged and the benefits they reap from using analytics associated with Big Data.

                      sdi big data

Not an industry itself, supply chain management is a key corporate service integral to a diverse range of industries. Not surprisingly SCM relies heavily on data analytics to optimize their supply chain, mitigate risk and perform demand/ supply forecasting.

In our procurement organization, with high volume transactions, we use analytics to consolidate and cleanse our volumes of data.  Company spend and supplier data are linked to allow greater insight into rising / falling commodity prices and sourcing options.  This heightened visibility allows us to reduce costs, mitigate risks, and tap into new suppliers – for ourselves and our clients.

More information on how we can help can be found here.